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No. of Recommendations: 1
1) The financial services industry has done a fabulous job of convincing the American public that individual is incompetent when it comes to managing his/her own investments and needs to pay an ‘expert’. I consider this to be nothing more than marketing propaganda. Most high school graduates should be able to become successful investors simply by ‘investing in strong businesses’ (or S&P Index Fund) rather than ‘playing the market.

The data does not support your hypothesis. "Should" be able to, sure. "Will or Can," not so much.

Congress is currently discussing a law that will automatically enroll individuals in their 401k with a mandatory contribution unless you opt out.

Not only do we need to bring horse to water, we must shove a feeding tube down their throat to get them to do the right thing.

2) The financial services industry has done its best to play on the public's fear about what could happen in the market. The industry deliberately obfuscates the difference between RISK and VOLATILITY by (wrongly) claiming these two factors indicate the same thing - especially when it relates to ‘SAFETY’. The stock market operates similar to an ‘auction house’ – each buy/sell transaction introduces more volatility into the marketplace. Investors must learn to control his/her emotions when it comes to volatility. RISK is related to the ‘quality’ of the BUSINESSES in which you invest.

The bolded section is the problem. Investors generally have no desire to learn. Emotion drives investing far more than logic does. It is exceptionally difficult to train/teach someone to trust logic over fear.

4) I am hesitant about investing in a foreign stock because of likelihood of paying foreign income tax and/or additional fees – suggest you carefully check your brokerage statement for such fees. Major concern with disputes involving global geopolitics (e.g. US-China dispute) which could quickly erase the value of a Chinese stock.

Why are you letting the potential of taxes be the tag that wags your investment performance? Didn't you just extol the virtue of the difference between risk and volatility? And, there is a lot more foreign investment than just China.

10) Many ‘experts’ extol the virtues of converting one’s Traditional IRA/401K to a Roth IRA so that one can avoid paying future income tax on distributions. Personally, I cannot foresee a situation in which there would be a financial benefit to the individual from such a conversion.

Then you are not likely a person that plans to retire early and/or delay social security.

12) I will not invest in a low-performing asset solely for diversification reasons

But you will avoid one based on potential tax reasons?

This is the reason I suggest one should ignore investment ‘advice’ which is based on tax rates ‘now’ versus rate retiree will face. Long-term compounded growth from investing those extra dollars (i.e., cash which would have been paid to IRS) will overwhelm any differences caused by differing tax rates.

That simply is not factual - and somewhat convoluted.

Ignore advice based on current tax rates. OK, Let's use 401k since this is the 401k board. So one should ignore the tax savings one might get if they are in a high income tax bracket and do what? Invest in taxable investments instead? Smart investing based tax implications can make a huge difference. Ask anyone with a lot of money if in doubt.

15) I am highly skeptical of a fund's prospectus because it is nothing more than a 'marketing brochure' - I expect that its performance numbers are inflated or irrelevant, or both.

So, you think a fund company would risk legal liability by committing fraud over a percentage point or two - that as you state, can be confirmed via numerous third party sources?

I will not consider a fund (or ETF) which has not recently outperformed the S&P 500 Index.

Big deal - and really irrelevant. Past performance is not an indication of future performance. It is exceptionally easy to pick funds based on past history but that says nothing about how they will perform in the future. I hope your investment analysis is a lot deeper than simply performance.


Not sure I would call such views contrarian so much as contradictory.
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